Insurance

Question 1

Explain compensation

Answer 1

When an insurance company pays for damage its known as compensation

Question 2

Explain premium

Answer 2

The amount of money people pay to the insurance company is called premium

Question 3

How does insurance work

Answer 3

People pay their premium for the year to the insurance company.
The insurance company then uses this pool of money to pay people who have suffered a loss.
They invest the remainder of the money to try and make more.

Question 4

How do insurance companies make money

Answer 4

They make money because not everybody will suffer a loss in their lives so they receive more money than they pay out.

Question 5

Explain actuary

Answer 5

Actuary works for an insurance company. Uses statistics to work out the risk of something happening the higher the risk the higher the premium.

Question 6

Explain insurance broker

Answer 6

If you need insurance you contact an insurance company directly or you contact a broker. A broker contacts multiple companies to get you the best deal. Ex:chill insurance

Question 7

Explain loss adjuster

Answer 7

Independent investigator who becomes involves when there is a disagreement between the insured and the insurance company. This occurs for complicated claims and negotiates something between the insurers and insured. .

Question 8

Explain Assessor

Answer 8

Is employed by the insurance company to make sure claims are covered by the terms of policy and investigates cause of damage or loss

Question 9

What does an insurance company do

Answer 9

They pay for damage caused

Question 10

Explain risk

Answer 10

Likelihood of something happening

Question 11

Explain claim

Answer 11

Damage is done and asking the insurance company to pay for the damage.

Question 12

Loadings

Answer 12

Loading~higher risk~higher premium.

Ex: if you have a dangerous job you pay more for life assurance

Question 13

Discount

Answer 13

Dicount~ lower risk~ lower premium

Ex:non-smoker

Question 14

What does house insurance cover

Answer 14

Building and contents

Question 15

What is the buildings insurance

Answer 15

The cost that it would take to build the house not what it would sell for.

Question 16

Explain contents

Answer 16

Valuables inside the house

Question 17

Explain and give example of average clause

Answer 17

Under insuring your home.

Ex:
House value;200,000
Insured for :100,000
Damage done: 50,000
Compensation: 25,000

Question 18

Name the two types of motor insurance

Answer 18

3rd party fire and theft

Fully comprehensive

Question 19

Explain 3rd party fire and theft

Answer 19

Minimum insurance cover you have to have. If the damage is your faulty out or your car are not covered. Only the other person is covered.

Question 20

Explain Fully comprehensive

Answer 20

Everybody in the crash is covered this has an expensive premium

Question 21

Explain no claims bonus

Answer 21

If you don’t make a claim your premium is lower.

Question 22

What is a proposal form

Answer 22

You fill out this form when applying for insurance. You must tell the truth on the form and the insurance company can say yes or no to your application.

Question 23

Explain policy

Answer 23

If an insurance company says yes to your proposal form they send out a policy. This is the contract between you and the insurance company and it gives details of the risks covered

Question 24

Explain claim form

Answer 24

When you suffer a loss and you want compensation you fill out this form. You may need to provide evidence with your claim form ex. Cost to fix roof.

Question 25

What are the five principles of insurance

Answer 25

Utmost good faith
Insurable interest
Contribution
Indemnity
Subrogration

Question 26

Explain utmost good faith

Answer 26

Must tell the insurance company the truth and all the facts

Question 27

Explain insurable interest

Answer 27

You must suffer a loss when insured item is damaged

Question 28

Explain contribution

Answer 28

If your house is covered by two insurance companies they will pay half the compensation each

Question 29

Explain indemnity

Answer 29

You can’t make a profit from insurance

Question 30

Explain subrogation

Answer 30

If there is a dispute over who is at fault the insurance company can continue the claim in your name.

Question 31

What are the three types of life assurance

Answer 31

Term policy
Whole life policy
Endowment policy

Question 32

Explain term policy and why people get it

Answer 32

Term policy pays out if the insured person dies before an agreed date. Policy pays next of kin
It’s cheaper and also people get it to protect their young families.

Question 33

Explain whole life policy

Answer 33

This type of life assurance will pay out an agreed sum of money whenever insured person dies. The money is paid to persons next of kin
The premium is higher because the company will definitely have to pay out.

Question 34

Explain endowment policy

Answer 34

The most expensive policy. It pays out money on a certain date, in the future to the insured person or it pays out to the next of kin if the insured person dies before that date.
They can also be cashed in by insured person before the set date for a lower amount known as surrender value